Sigma Forex Technical Analysis

Technical Analysis

Technical analysis is the study of market action, primarily through the use the movement of charts for the purpose of forecasting future price trends movement.
Technicians use technical indicators, chart patterns & technical strategies to forecast the next movement of the chart & compare it with the previous the run the trade in that base of comparison.

Types Of Charts

What are charts?

A chart or graph is a type of information graphic or graphic organizer that represents tabular numeric data and/or functions that it is a graph of the price movements of a given security over a given time period, sometimes along with volume data.
Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data.
Certain types of charts are more useful for presenting a given data set than others.
The charts are one of the main interests at Sigma.
Charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading.
Currency charts bring clearly a single period of time and that period could range from one minute to one month to several years.
Charts are the main tool that technical analysts use in order to plot data and predict prices.

According to the above chart,
Y axis represents prices
X axis represent period which can be customized within that range: M1, M5, M15, M30, H1, H4, D1, W1 and MN where M is minuets, H is hours, D is days, W is week and MN is months.
The fluctuations in the chart based on the demand & supply in the market & for that the technical analysis made to predict the next events by using different indicators.
Most of traders use daily charts & intraday date to forecast short-term price movements.
Most of investors use weekly & monthly charts to forecast long-term price movements.
Others might use combination between short-term & long-term charts.

What are support, resistance & trend?

Support: is the price level at which demand is strong enough to prevent the price from declining further.
Resistance: is the price level at which selling is strong enough to prevent the price from rising further.
- There is no support without resistance & there is no fixed support or fixed resistance in which each support can be a resistance next period by breaking prices below a support level, the broken support level can turn into resistance & Visa versa.
- It’s very difficult to predict the next support or next resistance

Trend: A trend line is a straight line that connects two or more price points and then extends into the future to act as line support or resistance. There are three cases
Uptrend: is a connection between two or more low prices in which the second price must be higher tan the first price (It acts as support line).
Downtrend: Is a connection between two or more high prices in which the second must be lower than the first price (It act as resistance line).

What are types of charts?
There are three types of charts in Sigma platform:
1) Bar Chart: It’s a style of chart used by some technical analysts where the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.

2) Line chart: It’s a style of charts created by connecting series of points together in a line.
It’s the most popular chart but has less use by the technical analytics.

This chart does not show what happened during the time unit selected by the viewer, only closing rates for such time intervals. The line chart is a simple tool for setting support and resistance levels.

3) Candlestick Chart: It’s the oldest types of charts developed in the 18th century by legendary Japanese rice trader Homma Munehisa, this style of charting is very popular due to the level of ease in reading and understanding the graphs.
Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.
Below are examples of candlesticks and a definition for each candlestick component:

Sigma Forex Lines & Channels

• Lines & Channels

Trend lines are simple, yet helpful tools in confirming the direction of market trends. An upward straight line is drawn by connecting at least two successive lows. Naturally, the second point must be higher than the first. The continuation of the line helps determine the path along which the market will move. An upward trend is a concrete method to identify support lines/levels. Conversely, downward lines are charted by connecting two points or more. The validity of a trading line is partly related to the number of connection points. Yet it's worth mentioning that points must not be too close together. A channel is defined as the price path drawn by two parallel trend lines. The lines serve as an upward, downward or straight corridor for the price. A familiar property of a channel for a connecting point of a trend line is to lie between the two connecting point of its opposite line.

• Averages

If you believe in the "trend-is-your-friend" tenet of technical analysis, moving averages are very helpful. Moving averages tell the average price in a given point of time over a defined period of time. They are called moving because they reflect the latest average, while adhering to the same time measure.
A weakness of moving averages is that they lag the market, so they do not necessarily signal a change in trends. To address this issue, using a shorter period, such as 5 or 10 day moving average, would be more reflective of the recent price action than the 40 or 200-day moving averages.
Alternatively, moving averages may be used by combining two averages of distinct time-frames. Whether using 5 and 20-day MA, or 40 and 200-day MA, buy signals are usually detected when the shorter-term average crosses above the longer-term average. Conversely, sell signals are suggested when the shorter average falls below the longer one.

There are three kinds of mathematically distinct moving averages: Simple MA; Linearly Weighted MA; and Exponentially Smoothed. The latter choice is the preferred one because it assigns greater weight for the most recent data, and considers data in the entire life of the instrument.
Fundamentals Affecting the US Dollar

Types Of Charts

A chart or graph is a type of information graphic or graphic organizer that represents tabular numeric data and/or functions.
Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data.
Certain types of charts are more useful for presenting a given data set than others.
The charts are one of the main interests at Sigma.
Charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading.
Currency charts bring clearly a single period of time and that period could range from one minute to one month to several years.

To open a new Forex chart:

• Through the menu options File > New Chart.
• Right-click the Market Watch window, then select the Chart Window options
• Clicking on "New Chart button" on the toolbar
• Or press the Ctrl + W key combination